LONDON — Sports Direct founder Mike Ashley agreed to settle a £750,000 legal bill after a banker correctly guessed how many coins he had in his hand, a court has been told.
The incident allegedly took place at a meeting with Merrill Lynch bankers on the final night of Sports Direct’s IPO process in 2007.
Jeff Blue, a former Merrill Lynch banker who is suing Ashley, claims the billionaire was “bored and frustrated by the negotiations” over fees and keen to get to Mayfair members club and casino Fifty St James.
Ashley left a meeting before the matter of who would pay Merrill Lynch’s legal bill was settled, Blue claims, only to be pursued by Simon Mackenzie-Smith, head of UK Investment Banking at Merrill Lynch. Ashley allegedly didn’t want to return to the meeting, instead proposing a game of “spoof” to settle the matter.
“Spoof” is a game of chance popular among bankers where players take a handful of coins and must guess how many are held between all the players. Mackenzie-Smith “reluctantly agreed,” Blue claims. Ashley lost and Sports Direct paid Merrill Lynch’s £750,000 legal bill.
Blue recounts this alleged incident in his testimony to highlight Ashley’s unconventional business style. Blue, a former advisor to Sports Direct, is suing Ashley over a £15 million bonus the pair reportedly agreed during a night at the Horse & Groom.
Ashley claims the promised bonus was simply “drink banter.” Blue is seeking to show that the billionaire regularly conducted businesses while drinking and often went simply on his word.
David Cavender QC, the leader of Mike Ashley’s legal team, is accused Blue of “making up evidence” and said the claim was an “opportunistic try-on” during the second day of testimony on Tuesday.
Mike Ashley is set to appear on Wednesday at the trial, which is scheduled to run until the middle of next week.
Here is Blue’s full account of the game of spoof, taken from his written testimony:
“After a protracted negotiation, the only issue that remained unresolved was reimbursement of Merrill Lynch’s legal fees: a bill of around £750,000. Bored and frustrated by the negotiations, Mr Ashley (who was keen to get to Fifty St James), unexpectedly got up and left the meeting room at Freshfields, heading for the client reception lobby. Simon Mackenzie-Smith (Head of UK Investment Banking at Merrill Lynch) pursued Mr Ashley down the corridor and caught up with him just as he was entering the client lift. The conversation went along the lines, “Mike, what about the legal fees for underwriters’ counsel?” Unimpressed, Mr Ashley’s response was simply, “What about it?” Ordinarily, the client, i.e. Sports Direct, or the selling shareholder, i.e. Mr Ashley, would pay such fees. In order to resolve the situation, Mr Ashley proposed a game of spoof (a game of chance, well known amongst City traders). While somewhat taken aback by this unusual proposal, Mr Mackenzie-Smith reluctantly agreed, as Mr Ashley was clearly about to leave and Merrill Lynch’s prospects of recovery thereafter appeared to be limited. Mr Ashley lost the hand of spoof and the £750,000 in legal fees was paid to Merrill Lynch.”
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